- Both a GSA and a specific security agreement are governed by the same Ontario statute, the Personal Property Security Act (PPSA), and both work the same basic way: the borrower grants…
- A GSA is written broadly, typically sweeping in equipment, inventory, receivables, and other personal property the business owns now or acquires later.
- A specific security agreement — sometimes just called a security agreement over a described asset — is narrower by design.
Not every business loan needs — or should have — a claim on absolutely everything the business owns. Ontario lenders and borrowers have two basic tools for securing a loan against personal property: a broad general security agreement (GSA) or a narrower specific security agreement tied to a single piece of collateral. Which one gets used shapes what happens if the loan ever goes into default, and how much room the borrower has to raise other financing later.
This article compares the two approaches, when each is typically used, and why many commercial loans end up using both.
Two Ways to Secure a Business Loan
Both a GSA and a specific security agreement are governed by the same Ontario statute, the Personal Property Security Act (PPSA), and both work the same basic way: the borrower grants the lender a security interest in personal property, and the lender registers that interest on the PPSA registry to protect its priority. The difference is scope — how much of the business's property the agreement actually reaches.
What a General Security Agreement Covers
A GSA is written broadly, typically sweeping in equipment, inventory, receivables, and other personal property the business owns now or acquires later. It gives the lender a claim against the business as a whole, not against one identifiable asset. Lenders extending working-capital loans or lines of credit generally want this kind of broad coverage, because the collateral base (inventory, receivables) naturally fluctuates.
What a Specific Security Agreement Covers
A specific security agreement — sometimes just called a security agreement over a described asset — is narrower by design. It's tied to one piece of collateral or a defined group of assets: a single piece of equipment financed by a term loan, a vehicle, a specific machine. The lender's claim doesn't extend to the rest of the business's property.
Comparing the Two
| Factor | General Security Agreement | Specific Security Agreement |
|---|---|---|
| Scope of collateral | All (or nearly all) personal property, including after-acquired assets | One asset or a defined, limited group of assets |
| Typical use case | Operating lines of credit, working-capital loans, broad business financing | Equipment or vehicle financing tied to a specific purchase |
| Effect on future financing | Can make it harder to pledge other assets to a new lender without consent | Leaves the rest of the business's assets free to be pledged elsewhere |
| Registration | Registered on the PPSA registry, often with a broad collateral description | Registered on the PPSA registry against the specific collateral described |
| Priority against a PMSI | Can be leapfrogged by a properly preserved purchase-money security interest in the same collateral | Often is the purchase-money security interest, if it secures the purchase price of the asset |
Why Lenders Often Want Both
It's common for a business to end up with a GSA from its principal lender (covering the business generally) and a specific security agreement from an equipment vendor or finance company (covering just the equipment it financed). These can coexist without conflict, as long as the specific security agreement — particularly if it qualifies as a purchase-money security interest — takes the steps needed to preserve its priority over the earlier GSA for that particular asset.
Which Should a Borrower Expect to Sign
From a borrower's perspective, a specific security agreement is generally the less restrictive option, because it leaves the rest of the business's assets available as collateral for other financing. A borrower negotiating a GSA has more reason to push back on scope — asking a lender to carve out specific assets, cap the collateral description, or agree to release collateral as the loan balance falls — than a borrower signing a security agreement tied to one machine, where the scope is already narrow by nature.
Reading the Fine Print Either Way
Whichever document lands on your desk, the questions worth asking are similar: exactly what collateral is described, what counts as a default, what happens to the collateral (or the rest of the business, under a GSA) if a default occurs, and whether the lender needs your consent before registering, amending, or assigning the security interest to someone else. A specific security agreement is narrower in scope, but that doesn't make its default and remedy provisions any less worth reading carefully before you sign.
Frequently asked questions
Can a lender require both a GSA and a specific security agreement?
Yes. It's common for a business's main lender to hold a GSA over the business generally while an equipment vendor or separate finance company holds a specific security agreement over the asset it financed.
Does a specific security agreement need to be registered too?
Yes. Both a GSA and a specific security agreement need to be registered on the PPSA registry to perfect the lender's interest and protect its priority against other creditors.
Which type of security agreement gives a lender better priority?
Neither is inherently "better" — priority generally depends on registration timing and, for equipment or inventory financing, whether the specific agreement qualifies as a purchase-money security interest with special priority rules. A GSA holder registered first still usually has priority over a later, ordinary specific security agreement.
Can I negotiate what's included in a GSA?
Often, yes, particularly if you have some bargaining power or existing assets you want to keep unencumbered. Lenders will sometimes agree to carve out specific assets or cap the collateral description, but you have to ask before signing — not after.
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